The Commission found that Sandra Allan, who claimed she was unaware of her responsibilities as a trustee of the charity, had been subject to a conflict of interest when she secured the leases on the 40-place nursery adjoining Greatham Village Hall in Hampshire in 1993 and 1998, allowing her to pay between Pounds 1,280 and 2,160 a year. In a report the Commission said the charity 'was disadvantaged by the arrangement' because 'evidence produced by the current trustees (shows) that an open market rent is currently in the region of Pounds 25,000 a year'.
The current trustees are considering legal action against Mrs Allan to recover the lost revenue.
The leases were void because Mrs Allan had failed to obtain the Charity Commission's written consent - a condition under the Charities Act 1993, as there was a clear conflict of interest since she was a trustee.
The Commission found 'serious irregularities' in the way the leases were granted. 'There was no discussion of, or decision taken by, the full committee to grant either lease. A small minority of committee members who signed the leases did so without telling the full committee,' its report said.
The Commission's report noted how 'over the years, (Mrs Allan) had worked hard to provide a valuable facility for the village and surrounding area, and the fundraising carried out by her and others had provided an important enhancement to the village hall facility'. But the scandal came to light when she attempted to sell the nursery school business 'with the benefit of the lease for Pounds 150,000'.
The charity appointed a sub-committee to investigate the circumstances surrounding the granting of the leases. Five trustees resigned as a result of its initial findings, which were then reported to the Charity Commission in May last year.
The Commission found that some members of the village hall committee were unaware that the Greatham Playing Field and Village Hall was a registered charity and that they were trustees. It said, 'Although the committee members may not have been fully aware of the implications of being a charity trustee, they were aware that they had a general duty of care in the way they managed the playing field and village hall assets.'
David Onslow, who recently became treasurer of the trustees, said, 'The Charity Commission has been very helpful. The report is very complete and confirms all the things we suspected had happened.'
The nursery is now being run by Elaine Chiverton, who worked there for 14 years before leaving three years ago to manage her own nursery nearby. She said numbers in the purpose-built nursery had declined as a result of the controversy, but added, 'We are more hopeful about the future. I have got the same eight members of staff and the village hall committee has given us a three-year licence.'